Planning ahead: RBA says expect long-term low interest rates

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Good news for mortgage holders this week, with the RBA saying “it’s reasonable to expect an extended period of low interest rates”.

Figures released on Wednesday show that core inflation, the RBA’s preferred measure, is currently at 1.4%.

However, Reserve Bank of Australia (RBA) Governor Philip Lowe says it is highly unlikely the RBA will contemplate higher interest rates until it’s confident that inflation has returned to 2-3%.

“Whether or not further monetary easing (aka further rate cuts) is needed, it is reasonable to expect an extended period of low interest rates,” he said in a speech.

“On current projections, it will be some time before inflation is comfortably back within the target range.”

Will the RBA cut rates further this month?

The RBA will meet again on Tuesday, however it’s appearing increasingly unlikely that it will cut rates for a third consecutive month.

That’s because June quarter inflation figures released on Wednesday narrowly beat out the market’s expectations (+0.5.%) with a rise to 0.6%.

As a result, most experts are predicting that will be enough to postpone a third RBA rate cut to 0.75%, but not enough to prevent it from happening between now and the end of the year.

Get in touch

If you want an update on what the RBA’s latest comments on long-term low-interest rates mean for your current home loan situation, then get in touch.

We’re following the market closely and will be happy to run you through some mortgage and refinancing options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Have your smashed avo and eat it too!

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One of the most annoying myths for young homebuyers has to be the smashed avo breaky one. You know – to buy a property you have to forego delicious weekend breakfasts. Well, here are three easy recipes that prove otherwise.

Today we’re going to have a little fun and trade in our finance professional cap for a chef’s hat.

Why? Well you see, there’s this pesky little lie about buying a home that just won’t go away.

It’s the one where some self-proclaimed property expert condescendingly tells Millennials that all they need to do to afford a property is give up luxuries such as smashed avocado for breakfast.

Well, to quote celebrity chef Gordon Ramsay… actually, it’s probably best we don’t quote Gordon in this instance.

Instead, here are three gourmet breakfasts you can whip up at home for no more than $15 for four people.

1. Smashed avocado and feta on toasted rye

Let’s start with the obvious one. Sure, smashed avocado is going to cost about $15-$20 per person in a hipster cafe, and that won’t exactly break the bank if you do it every now and then.

But it also happens to be one of the easiest, quickest and cheapest breakies you can make at home. And it takes just minutes.

This Taste.com.au recipe simply requires:

– two avocados – smash it! ($4)
– 80g creamy feta – mix it! ($2.50)
– half a loaf of rye bread – toast it! ($2)
– 2 tablespoons chopped fresh mint or dill – garnish it! ($2)
– 1 lemon/lime – drizzle it! ($1)

Total price = $11.50 (price proportional to ingredients used in each item purchase).

Plating-up is straight-forward enough, but if you’d like to follow a step-by-step guide, click on the recipe link above, or check out this BBC version.

To jazz it up even further, feel free to add a thin slice of smoked salmon, a poached or half-boiled egg, or some crunchy bacon.

2. French crepes

Weekend breaky doesn’t get much simpler, or more fun, than flippin’ French crepes.

Seriously. You’ll be surprised just how easy, tasty and cheap this meal is (as long as you have a non-stick frypan).

The best bit? Taking turns to flip the crepes makes for great entertainment too. Especially when someone drops one!

This Taste.com.au recipe requires the following ingredients to feed four to six people.

– 2 cups of plain flour ($1)
– 2-3 cups of milk ($1)
– 4 eggs ($3)
– pinch of white sugar
– Filling/s of your choice $5-$10

Total price = $9 to $14

Once you’ve whisked or blended all the ingredients together (minus the fillings, obviously), let the batter rest for 20-30 minutes to get the texture just right.

Warm the non-stick frypan to medium heat, melt some butter across it, then thinly coat the pan with the crepe mix.

After a minute or two, use a spatula to see if the bottom of the crepe has turned golden. If so, ensure it’s loosened off the pan with the spatula and then let rip with a flip!

When the other side is also golden serve the crepe on a plate, smother it with a delicious filling, and then roll or fold in triangles ready to eat.

Popular fillings include lemon drizzle and caster sugar, jam, honey, and Nutella and ice cream. But the possibilities are endless!

3. Shakshuka (aka poached eggs in spicy tomato sauce)

Ok, so this dish will be slightly more complicated to put together, so we won’t run through the whole process in this article.

Instead, here are a number of recipes you can follow, including from the New York Times, Taste.com.au, The Guardian and the ABC’s Poh’s Kitchen.

Now, this is traditionally a vegetarian dish so, provided you have most of the required spices in your cupboard, it shouldn’t cost more than $12-$15 to create.

But, if you want to go a little rogue, then feel free to add in some diced bacon, chorizo, minced lamb or pork sausage.

Get in touch

With all the above dishes costing less than $15, it’s safe to say you’re not going to need us to help you finance them!

But, if you’re looking at buying a property and want help lining up finance for that, well, you know exactly where to find us – in our office on weekdays, and cooking up a breaky storm on the weekends!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Housing affordability the best it’s been since 1999: HIA

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Great news for home buyers – housing affordability is the best it’s been since 1999, according to new data released by the nation’s peak housing and building body.

That’s right – housing affordability is comparable to the days when the Y2K bug had us fearing for our lives, Nokia Snake was the pinnacle of mobile gaming, and median house prices in Australia ranged between $112,000 (Hobart) to $272,000 (Sydney).

These days, however, median prices range from $420,000 (Hobart) to $840,000 (Sydney).

But here’s where it gets a little interesting.

For a home buyer with an average income purchasing a median-priced dwelling (assuming a 10% deposit), mortgage repayments will consume the smallest proportion of their earnings since 1999, according to the Housing Industry Association (HIA) Affordability Index.

Hang on, how is this possible?

The main reason housing affordability is comparable with levels seen in 1999, despite house prices rising significantly faster than incomes over the last 20 years, is that interest rates are (in the vicinity of) 4.6% today compared with 6.7% in 1999, says HIA senior economist Geordan Murray.

Average earnings have also increased by 113% over the past 20 years.

While the median home price has increased by 228%, the lower interest rates have kept the cost of servicing a loan the same, points out Murray.

“The combination of lower home prices, improvements in wage growth and lower interest rates have contributed to the ongoing improvement in the HIA Affordability Index for the June 2019 quarter,” adds Murray.

What does the HIA Affordability Index measure?

HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

All eight capital cities saw an improvement in the affordability index over the quarter to June 2019, with Darwin seeing the greatest improvement with its index up by 4.8%.

This was followed by Melbourne (+3.0%), Perth (+2.6%), Brisbane (+2.6%), Sydney (+2.4%), Canberra (+2.4%), Hobart (+ 2.2%) and Adelaide (+1.0%).

It gets even better

There are a number of recent initiatives that are not reflected in HIA’s Affordability Index but are nonetheless providing further benefit to purchasers, HIA points out.

There’s the reduction in income tax, the easing of APRA restrictions on mortgage lending, and the Australian government’s First Home Loan Deposit Scheme.

“The passing of the federal government’s income tax package means that millions of Australians will have extra income to put towards a deposit for a new home,” says HIA managing director Graham Wolfe.

Get in touch

If you’d like to take advantage of the current housing affordability conditions, then get in touch.

We can help arrange a home loan that’ll put a smile on your face and get you partying like it’s 1999.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

What the cash rate cuts mean for other areas of your finance

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Whenever the Reserve Bank of Australia (RBA) changes the official cash rate we all hear about how it will impact home loans. But it affects many other areas of finance and the economy, which we’ll look into today.

The RBA has cut the official cash rate to a new record low of 1%, just one month after lowering it to 1.25% – which was the first rate cut in almost three years (since August 2016).

Now, whenever this happens we all hear about what it will mean for mortgage-holders.

But it also has a flow-on effect for many other areas of finance, which we’ll look into below.

If you’re saving for a first home deposit

If you’ve got a large chunk of your money in a savings account and you’re trying to save for a first home deposit, the latest two RBA rate cuts probably aren’t the best news for you.

That’s because you want your savings account to have the highest interest rate possible and a cut in the official cash rate will likely mean a reduction in interest you earn on your savings.

If you are worried interest rates are going to be cut further, and you want to lock in a rate for a particular length in time, you can look into a term deposit account.

Alternatively, if you think now is a good time to jump into the property market, feel free to give us a call and we can run you through your financing options.

Car finance

If the RBA cuts the official cash rate, the interest rates on car loans generally go down too.

The bad news is that if you have already taken out a car loan it usually has a fixed interest rate for the period of your loan term.

The good news is with interest rates at an all-time low, if you’re thinking about buying a new car or refinancing an existing car loan, now might be the time to lock a rate in.

The many other types of loans

Changes to the cash rate affect interest rates on all kinds of loans, including commercial and business loans, asset and equipment finance, investment loans.

If you’re thinking about taking out any type of loan, or weighing up the pros and cons of refinancing, give us a call and we can give you the lowdown on the new landscape.

Credit cards

Yep, the official cash rate generally has an effect on the interest rate on credit cards too.

That’s because lowering the interest rate is meant to encourage people to spend more – including on plastic – which in turn can give the economy a boost.

If you’re someone who has been guilty of spending a little too much on your credit card, however, get in touch – we can help you look into consolidating it with other debts that are ripe for refinancing now.

Get in touch

Basically, it comes down to this: if you have an existing or prospective debt and you want to see how it all stacks up on the back of the two consecutive RBA rate cuts, then get in touch.

We’re following the market closely and can tell which lenders are passing on the rate cuts to their customers, which lenders aren’t, and present you with refinancing options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Your home is not perfect: the value of pest and building inspections

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They say that home is where the heart is. And it’s true that we spend so much of our time, money and emotions in our homes. So it can be hard to truly look at them and think that something could be wrong.

But when you’re selling your home, or looking to rent it out as an investment, any faults or flaws can cost you money.

That’s why it’s a good idea to have a building and pest inspection done before you list your home.

If any problems are uncovered, they can be dealt with there and then; if there aren’t any problems, you’ll be able to show potential buyers or renters the inspection results.

This will potentially help you get more value from your property.

Pesky pests

There are a number of common pests in Australia that can affect homes and cause problems for homeowners.

The ones most likely to cause trouble are cockroaches, rodents, and bedbugs. Destructive termites are also a serious issue in some areas of Australia, mainly in coastal areas and especially up north.

Cockroaches and rodents carry disease, get into and ruin food supplies, and leave droppings behind, making homes unsanitary. They are particularly dangerous to children and pets, though adults can also become sick from contact with these animals or their faeces.

Bedbugs aren’t likely to carry disease, but their bites are painful and itchy, and their life cycle makes it extremely difficult to remove them from a home. Like fleas or lice, their eggs are basically impervious to chemicals.

This means that a home must be treated multiple times; the first treatment will kill any adults and nymphs that are currently present; the second treatment is designed to kill any eggs that have hatched into nymphs before they can become breeding adults.

Each of these pests can be difficult to manage on your own, and often require professional treatment to eliminate the problem.

Demonstrating that your home is clear of them can make it possible to sell your home for a higher price.

If you’re renting your place out, on the other hand, you’ll know if the pests entered the property before or after your new tenants.

Building inspections

Many buyers will want their own inspector to survey the building before they place a bid, but you can sometimes skip that process by having your own inspection completed.

You can also have a building inspection completed before you even consider listing your home for sale.

Building inspectors look for all sorts of faults in a home, from major structural damage to leaking pipes.

Once any problems are identified, you can make a decision about whether it’s better to disclose the issue and lower the selling price on your home, or fix the problem before you sell the house.

Which solution is right for you depends on the specific damage and the cost of repair.

The one thing you should absolutely not do, as you prepare your home for sale, is to take the ‘she’ll be right’ approach.

There’s nothing worse than having a potential buyer uncover something you should have known about. This immediately makes the buyer wonder what else you don’t know about – or worse, aren’t telling them about.

Final word

Whether you’re looking to sell, or simply looking to get in new tenants, knowing that your property is in tip-top shape can help you maximise the return on your investment, and make smart decisions about repairs and pricing.

If you’d like to find out more about this topic, or others that may help increase the value of your property, then get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.